Business Model and Plan

About this course

Welcome to Course 1 of Module 3 of our comprehensive course program, carefully designed and developed by professionals from prestigious VET providers within the scope of the  Challenger project. 

This is the final phase of your learning journey. Throughout this module, you will be able to apply the theories, frameworks, and strategies learned thus far to conceptualize, develop, and execute your innovative ideas. Working in a team guided by experienced mentors and industry experts, you will navigate the complexities of bringing your innovations to life, from ideation to market launch.

In Module 3, you’ll explore courses covering critical aspects such as business model development, ethical and sustainable considerations in the innovation process, market analysis, intellectual property protection, market entry strategies, and marketing branding, equipping you with the skills to launch your innovative ventures confidently.

Building upon the foundational knowledge acquired in Module 1 and the practical skills made in Module 2, this phase marks a significant transition as you develop your own innovative ventures.

• Module 1:          Learning the basics
• Module 2:          Applied Phase 1: Working on hands-on projects for business
• Module 3:          Applied Phase 2: Creating your own innovations

All these courses are offered for free. If you registered for participation and handed in the group assignments to your tutor/role model, you will receive a confirmation of participation in the form of a digital badge. After completion of all courses of the module, you will receive an innovation certificate that will prove your experience and gained know-how.

The courses are aimed at learners in VET schools, bachelor students in universities, persons interested in developing their entrepreneurial mindset, persons interested in innovation and how to put ideas into practice, teachers/educators, industry experts, and community members.

Canvas business model, business plan, financial planning and budgeting

Explore key business success elements: Canvas Business Model, Business Plan, and Financial Planning. Learn to articulate ideas, define strategy/goals, and ensure financial growth. Ready for targeted learning to transform ideas into plans.

Introduction

Created as an adaptation of the traditional Canvas business model, the Lean Canvas business model has been specifically developed to meet the needs of start-ups and fast-changing business environments. Developed by Ash Maurya, the model focuses on the rapid identification and testing of key components of a business model, including problems, solutions, target markets, costs and revenues. It aims to provide a clear, concise framework for creating scalable business models focusing on key aspects.

The importance of the business model:

Lean Canvas has become popular for its ability to adapt quickly to change and to test business ideas effectively. In contrast to traditional, extensive business plans, Lean Canvas allows entrepreneurs to quickly focus on key questions and hypotheses, saving time and resources.

Key trends in business modelling:

1. Agility and adaptability: in today’s fast-changing business world, adapting and iterating quickly is crucial.
2. Customer focus: Increasing emphasis on understanding and meeting target customers’ needs.
3. Sustainability and social responsibility: trends show an increased commitment to sustainable business models considering environmental and societal impacts.
4. Digitalisation and technology: increased use of digital tools and technologies to optimise business models and processes.

Lean Canvas fits these trends and enables entrepreneurs by providing them with a flexible and clear framework for developing and transforming their business ideas.

What is the Lean Canvas Business Model?

Basic concepts of the Lean Canvas business model:

Lean Canvas is specifically tailored for the startup environment; it is a tool to quickly and efficiently create business models. This approach focuses on quickly identifying and solving the key problems faced by the target group and provides a clear structure for transforming these challenges into business opportunities.

1. Tailored for start-ups: the Lean Canvas is designed specifically for start-ups where speed and flexibility in business planning are key. This tool enables startups to respond quickly to changing market conditions and customer needs.
2. Quick problem identification: One of Lean Canvas’s core features is its ability to identify and understand the problems facing the target group quickly. This includes analysing the needs and challenges of the customers that the company wants to solve.
3. Effective solution design: Lean Canvas encourages entrepreneurs to develop and test effective solutions to identified problems. This includes thinking of innovative products or services that can meet the target group’s needs.
4. A clear structure for business opportunities: Lean Canvas provides a structured framework to help entrepreneurs turn challenges into opportunities. This enables companies to develop a clear and focused business model focusing on key aspects such as value proposition, target groups, channels, revenue streams, and KPIs.

Elements of the Lean Canvas business model:

For a concise explanation of each element using business environment examples, see the PPT in Course Materials.

Business Plan, Financial Planning and Budgeting

1. Business Plan

What is a business plan?

A business plan is a comprehensive document detailing the company’s objectives, strategies to achieve them, market analysis, financial forecasts and operational plans. It serves as a roadmap for the establishment and growth of the business and as a key communication tool for investors and other stakeholders.

A business plan is a useful and flexible tool. It is a guide.

Regardless of their size, companies cannot expect to succeed and grow without a sound business plan in today’s global- and highly competitive environment.

Differences from the Lean Canvas business model:

– While the Lean Canvas Business Model provides a quick and agile tool for developing and testing business ideas, the Business Plan provides a more detailed and comprehensive business picture. The main differences include:

• Detail and scope: The Business Plan is more detailed and comprehensive, covering broader aspects of the business, including market strategies, competitive analysis, operational plans and financial projections.
• Purpose: Lean Canvas is ideal for quickly checking and adapting business models, and a business plan is a comprehensive document used for obtaining funding and running a business.
• Timeframe: Lean Canvas is usually completed quickly and updated regularly, whereas the Business Plan is a longer and more static document, usually produced annually.

 Summary of the Business Plan

For a concise explanation of the business plan summary, see the PPT in Course Materials.

2. Financial Plan and Budget

The importance of a financial plan:

• A financial plan is crucial to the success of any business. It enables companies to manage their financial resources effectively, anticipate and plan for future financial needs, optimise their profitability and reduce financial risks. Financial planning includes the development of budgets, financial projections and strategies for cash flow and capital management.

The basics of the financial plan:

• Revenue: This is all an enterprise’s income from selling its products or services. Understanding and forecasting revenue is key to planning the growth of a business. Revenue needs to be analysed and forecasted accurately, considering seasonal trends, market conditions and growth potential.
• Costs: Costs include all the expenses needed to run the business. They can be divided into fixed costs, which are fixed (e.g. rent, salaries), and variable costs, which vary according to the volume of business (e.g. material costs, commissions). Properly managing and controlling costs is essential to maintaining the financial stability of a business.
• Profitability measures how much profit a company makes on its revenues. Profitability analysis involves calculating margins, profit ratios, and other indicators that help assess a company’s performance.

Short practical exercise or example: drafting a budget

We will conclude our session with a short but crucial practical exercise – drafting a budget for a hypothetical company or product. This will involve the following steps:

1. Determining revenue: Estimating revenue based on projected sales or services.

2. Costing: Please list your business activity’s fixed and variable costs.

3. Calculating the profit: subtract the costs from the revenue to estimate the profit.

This exercise aims to give you a realistic insight into how a basic budget is prepared and how important this process is for every business decision.

3. Conclusion and Recommendations

The importance of financial planning

Financial planning is crucial for any business, as it allows for a better understanding of the company’s financial picture and informed decision-making. Good financial planning helps you identify potential financial challenges and opportunities, optimise costs, and achieve your business objectives.

Recommendations for further studies

1. Education and training: consider further courses or workshops on advanced financial analysis and planning.
2. Reading professional literature: many books and articles offer deeper insights into financial management and strategies.
3. Use financial tools: put into practice various financial planning tools and programmes to improve your skills.

Course materials

Assignment

This assignment needs to be completed as a team effort. Your tutor or role model will guide you through the assignment. Please reach out if you require support. The final assignment should be submitted to your designated mentor.

Once your course is complete, your tutor or role model will confirm your completion and instruct you to upload the results to the platform to receive permission to obtain a badge. Upon completing all six courses within a phase, you will receive an innovation certificate for that respective phase.

Practical exercise:

Lean Canvas Rapid Business Model

In this exercise, you as a participant will create a quick version of the Lean Canvas Business Model. The aim is to apply the concepts of Lean Canvas to a practical example. This is a great opportunity to test your understanding of Lean Canvas and develop an idea that interests you.

Exercise instructions:

Choosing an idea or company:

Choose a fictional business idea or an existing business you’d like to work on. It could be a brand new product or service you have thought up, or an analysis of an existing business.

Fulfilling the Lean Canvas:

Use the Lean Canvas template in the PPT, which includes nine key segments: Problem, Target Groups, Unique Value Proposition, Solution, Sales/Marketing/Distribution, Cost Structure, Revenue, Key Performance Indicators and Irreplaceable Advantage.

Then, for each segment, write down the key points that are relevant to your chosen idea or business. Focus on short, clear and concise ideas.

Time limit:

Try to complete the task in 20 minutes, which will encourage you to think quickly and focus on the essential elements of the business model.

Self-reflection:

After the exercise, take a few minutes to reflect. Reflect on what you have learned during the exercise, which parts were easy and which were more challenging. Also think about how you could put Lean Canvas into practice for your own business ideas or work.

Objective of the Exercise:

This exercise will allow you to develop your understanding of Lean Canvas and apply the theory to a practical example. Through this activity you will gain insight into the process of designing a business model and develop critical thinking and analytical skills that are essential for any entrepreneur.

Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency (EACEA). Neither the European Union nor EACEA can be held responsible for them.